Australia Shifts University Funding: Caps on Student Numbers, Focus on Regional Equity

The Australian federal government has concluded a $1.056 billion pandemic-era university funding program and introduced new legislation to cap domestic student numbers, shifting from a dollar-based funding model to a system of allocated student places.

The reform aims to redistribute university enrolments toward regional and disadvantaged students, while funding 230,000 new commencing places over the next decade.

End of Pandemic Funding Programs

The Australian government allocated $1.056 billion in taxpayer funds under the Higher Education Continuity Guarantee and the Higher Education Relief Program, which operated from 2020 to the end of 2023. Introduced by the Morrison government and continued by the Albanese government, these programs provided funding based on allocated places rather than actual student numbers.

According to higher education expert Andrew Norton, the expected mass dropout of domestic students during the pandemic did not occur; instead, demand surged in 2021.

Institutional Payments by Region

Regional Universities (over $100 million each):

• James Cook University
• University of Tasmania
• University of the Sunshine Coast

New South Wales:

• University of NSW: $23 million
• Western Sydney University: $20 million
• University of Sydney: $10 million

Victoria:

• RMIT University: $37 million
• University of Melbourne: $2.3 million
• Monash University: $1.2 million

Stakeholder Perspectives

"The funding helped keep institutions financially viable during an uncertain period, particularly regional universities." — Universities Australia CEO Luke Sheehy

A Department of Education spokesperson said the Universities Accord recommended continuing the program into 2025. Under new arrangements, funds are directed to support underrepresented students. The policy ended with the introduction of the managed growth system, which caps domestic student numbers.

Andrew Norton warned that unless funding follows enrolments, students risk missing out on preferred courses.

Education Minister Jason Clare stated that forthcoming legislation would assist rural and low-socioeconomic cohorts, adding: "Talent is everywhere. Opportunity isn't."

Reformed Funding System

Legislation and Structure

The higher education funding reform passed the House of Representatives on Thursday. The new system aims to address the concentration of student numbers at capital city universities, which has occurred at the expense of smaller and regional institutions.

Under the reform:

• Each institution will receive a 'core student load' indicating how many students can enrol.
• The Australian Tertiary Education Commission (ATEC) will decide 'additional growth allocation' for disadvantaged or regional students.
• Institutions enrolling regional or disadvantaged students may receive additional payments of up to $1,535 per student.

Changes from 2027

From 2027, universities will receive a maximum allocation of student places rather than a dollar amount, determined by ATEC within a total set by the minister. The minister will set total Commonwealth supported places for the next year by June 30 each year.

Minister Clare announced 16,000 additional places per year for three years, representing 2.6% of all 2024 Commonwealth supported places. ATEC will allocate these places among universities.

Over-Enrolment Restrictions

Under the current system, funding is capped but the number of places is uncapped; universities can accept student-contribution-only funding for extra students (over-enrolments).

The proposed system caps over-enrolments at each university at 5% above original allocation or 750 places, whichever is lower. Exceeding the cap means losing student contribution revenue for those extra students. 2024 data shows nine universities delivered student places 5% or more above their maximum funding.

Consequences for 2024 (Soft Launch)

• ATAR cut-offs across the Sydney basin increased due to a smaller allocation of places.
• The University of Sydney ended its guaranteed entry scheme.
• UNSW declined approximately 1,000 prospective students.
• University of Technology Sydney and Macquarie University made fewer offers.

Indigenous Students and Future Flexibility

Demand-driven funding for Indigenous students in bachelor degrees or medical courses is preserved, outside of caps. The minister gains power to make additional courses demand driven; nursing and teaching have been mentioned as possible examples.

Stakeholder Reactions

Government position: Education Minister Jason Clare stated that the reform will build a "bigger, better and fairer" education system and end competition for unfunded students. The government claims the reform will provide places for an extra 230,000 commencing students in the coming decade.

Criticism: Greens senator Mehreen Faruqi criticized the reform for not addressing the cost of degrees, noting fees can reach up to $50,000 under the former Coalition government's Job Ready Graduates scheme. Opposition education spokesman Julian Leeser argued the reform is anticompetitive and puts university interests ahead of students. Leeser claimed that a student from a rural area wanting to study in Sydney would likely get a place, but a Sydney student might have to go to a regional area.

Support from university representatives: Universities Australia CEO Luke Sheehy said the reform is "good for students, good for communities and good for the economy." George Williams, vice chancellor of Western Sydney University and chair of the 2050 Alliance, stated the changes would benefit the system and students.

Identified Risks

Critics note that over-enrolment restrictions provide less flexibility, potentially leading universities to be more cautious and reducing total enrolments. A regional university vice-chancellor stated their university over-enrols to serve local students preferring on-campus study. Another deputy vice-chancellor from a university focused on disadvantaged students stated they over-enrol rather than reject applicants with good chances of success.

ATEC will attempt to forecast demand, including for equity students, and may request more equity places from the minister if underestimated. The minister's June 30 deadline for next year's places occurs before application numbers are known, potentially leading to miscalculations.

Government projections of enrollment growth may be limited by over-enrolment restrictions. Total enrolments are likely to increase but less than possible under a more flexible system.